Texas muni to shut Gibbons Creek coal plant for most of the year

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Dive Brief:

The Texas Municipal Power Agency (TMPA) told the Electric Reliability Council of Texas (ERCOT) that it plans to operate the 470 MW coal-fired Gibbons Creek power for only five months of the year.

TMPA said it is not economical to run the plant in Anderson, Texas, except during the hottest months, from June through September. The agency must sell the plant by Sept. 2018 or its board will have to decide whether to shutter it completely.

TMPA says the plant cannot effectively compete with generation fueled by low cost natural gas and against an influx of wind power in ERCOT, a trend the grid operator expects to push up to 10 GW of coal-fired generation offline by the next decade.

Dive Insight:

In ERCOT, the absence of a capacity market means energy market prices can reach up to $9000/MWh during peak demand events, making it profitable to operate some plants for only part of the year.

But a recent influx of wind generation is cutting down on the frequency of those episodes, and better economywide efficiency is denting overall demand growth. Despite occasional price spikes from hot weather, ERCOT says the Texas grid has sufficient capacity to meet summer loads. Total generation is about 82,000 MW, against a summer peak demand forecast of about 73,000 MW.

As renewables increase the need for fast-ramping generation, less flexible coal plants are running less. A report released last September by the Institute for Energy Economics and Financial Analysis showed average capacity factors for major ERCOT coal plants in 2015 were significantly lower than in previous years. Gibbons Creek was one, with Platts noting its factor dipped to 39% this year after averaging 86% between 2004 and 2008.

The IEEFA report found that coal generated 39% of the electricity in ERCOT in 2015, but only 24.8% as of May 2016. By 2031, ERCOT expects 10 GW of additional coal retirements as solar increases to 17% of its generation portfolio.

TMPA has been trying to sell the Gibbons Creek plant and struck an agreement with the privately held Clean Energy Technology Association last year. But the sale effort has not been going well and there are no pending sales or attractive offers, TMPA told local news outlet KBTX.

In May, the municipal members of TMPA agreed to waive a Sept. 2017 deadline for the sale, allowing for more negotiation time. If the plant does not sell by Sept. 2018, the agency could face up to $40 million in decommissioning costs, according to the Denton Record-Chronicle.

The cities of Bryan, Garland, Denton, and Greenville make up the Texas Municipal Power Agency.